The Hong Kong Monetary Authority (HKMA) has issued a stern warning to the cryptocurrency industry, cautioning that crypto businesses masquerading as banks and employing banking terminology may find themselves on the wrong side of the region’s banking laws.
In an official press release, the HKMA underscored that the use of certain banking terms could potentially mislead the public, leading them to believe that these crypto enterprises possess the necessary authorizations to operate as banks in Hong Kong. However, the central bank reiterated that, in accordance with the region’s banking regulations, only licensed financial institutions are permitted to engage in banking or deposit-taking activities within the jurisdiction.
The HKMA explicitly alerted the public that companies utilizing titles such as “crypto bank,” “digital asset bank,” or “crypto asset bank,” as well as those claiming to offer traditional banking services or banking accounts, could be in violation of the law.
According to the HKMA’s directives, any entities or individuals other than authorized institutions are expressly prohibited from incorporating the term “bank” in their company names or descriptions. Furthermore, facilitating deposit-taking activities without the requisite license constitutes a clear violation of the law.
The HKMA took the opportunity to remind the public that crypto firms, despite their outward appearances, are not under the supervision of the central bank. Consequently, funds entrusted to these so-called “crypto banks” do not enjoy the safeguard of Hong Kong’s deposit protection scheme.
HKMA and Hong Kong’s Vigilant Crackdown on Unlicensed Crypto Activity
Hong Kong has been intensifying its efforts to enforce licensing regulations in the crypto sector. On September 15, the Securities and Futures Commission (SFC) of Hong Kong issued a warning directed at crypto exchange JPEX. The SFC accused JPEX of promoting its products and services in Hong Kong without obtaining the necessary license or even applying for one.
In response to the SFC’s stern admonition, JPEX’s staff mysteriously vanished from their Token 2049 booth in Singapore, and the exchange drastically increased its withdrawal fees to 999 Tether, seemingly aiming to deter users from withdrawing their funds from the platform.
The HKMA’s recent action against misleading crypto banking claims underscores the region’s commitment to maintaining regulatory clarity and ensuring that financial consumers are not misled by unauthorized entities in the rapidly evolving crypto landscape.
